Infiniti v. MS Liquidators , 204 So. 3d 550 ( 2016 )

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
INFINITI EMPLOYMENT SOLUTIONS,
INC., ETC.,
Appellant,
v. Case No. 5D14-583
MS LIQUIDATORS OF ARIZONA,
LLC, ETC.,
Appellee.
________________________________/
Opinion filed November 4, 2016
Appeal from the Circuit Court
for Orange County,
Robert J. Egan, Judge.
Rosemary H. Hayes, of Hayes Law, PL,
Orlando, for Appellant.
Scott A. Smothers, of Smothers Law Firm,
P.A., Apopka, for Appellee.
LEMONIDIS, R., Associate Judge.
Infiniti Employment Solutions, Inc., (“Infiniti”) appeals a final judgment which, in
part, denied its two motions for attorney’s fees and delay damages filed pursuant to
section 57.105, Florida Statutes (2013). For the following reasons, we conclude that the
trial court applied the wrong standard in considering and denying attorney’s fees and
delay damages to Infiniti, and therefore, we reverse.
Appellee, MS Liquidators of Arizona, LLC (“MS Liquidators”), contracted with
Infiniti where, for a fee, Infiniti would interview, screen, and hire temporary employees to
work at MS Liquidators’ stores and warehouses. Once Infiniti performed under the
contract and sent an employee to work at an MS Liquidators store, it would send MS
Liquidators an invoice for its services. Despite receiving nine separate invoices from
Infiniti, all without objection, MS Liquidators failed to pay the accrued balance due of
$16,828. Infiniti thereafter filed suit against MS Liquidators to collect on this debt,
asserting causes of action for breach of contract, account stated, open account, and
quantum meruit/unjust enrichment.
In its answer, MS Liquidators raised several affirmative defenses, including that
the contract between the parties was unenforceable due to the absence of essential terms
and for a lack of consideration. MS Liquidators also asserted that it was entitled to a
setoff against any damages that it potentially owed to Infiniti. After conducting discovery,
Infiniti served a motion for attorney’s fees and delay damages pursuant to section 57.105,
Florida Statutes (2013), alleging, among other things, that the affirmative defenses of lack
of consideration and lack of essential terms in the contract were both factually and legally
unsupportable. Several months later, Infiniti served a second motion for attorney’s fees
and delay damages pursuant to section 57.105. In this later motion, Infiniti asserted that
the setoff affirmative defense was not supported by the material facts in the case or the
present law applicable to the facts. In each motion, Infiniti sought attorney’s fees not only
against MS Liquidators but also from its attorneys and from Mr. Morrie Sherman
(“Sherman”) individually, as the owner of MS Liquidators. Infiniti also sought delay
damages based on section 57.105(2), which provides for sanctions against parties and
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counsel who interpose frivolous defenses or pursue litigation for the purpose of
unreasonable delay. Bionetics Corp. v. Kenniasty, 69 So. 3d 943, 944 (Fla. 2011). 1
After two years of litigation, on the morning of the scheduled trial, MS Liquidators
consented to entry of a judgment for the $16,828 debt, plus attorney’s fees. Following
the entry of this judgment, Infiniti filed a motion that essentially sought to enforce or
recover on its earlier motions for section 57.105 attorney’s fees and delay damages.
1 Section 57.105(1) and (2), Florida Statutes, specifically provides:
(1) Upon the court's initiative or motion of any party, the
court shall award a reasonable attorney's fee, including
prejudgment interest, to be paid to the prevailing party in equal
amounts by the losing party and the losing party's attorney on
any claim or defense at any time during a civil proceeding or
action in which the court finds that the losing party or the
losing party's attorney knew or should have known that a
claim or defense when initially presented to the court or at any
time before trial:
(a) Was not supported by the material facts necessary
to establish the claim or defense; or
(b) Would not be supported by the application of then-
existing law to those material facts.
(2) At any time in any civil proceeding or action in which
the moving party proves by a preponderance of the evidence
that any action taken by the opposing party, including, but not
limited to, the filing of any pleading or part thereof, the
assertion of or response to any discovery demand, the
assertion of any claim or defense, or the response to any
request by any other party, was taken primarily for the
purpose of unreasonable delay, the court shall award
damages to the moving party for its reasonable expenses
incurred in obtaining the order, which may include attorney's
fees, and other loss resulting from the improper delay.
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At the hearing held on Infiniti’s motion, the trial court “reluctantly” denied the motion
in its entirety based upon its determination that MS Liquidators’ one affirmative defense,
that the contract was unenforceable due to its lack of essential terms, was not “entirely
baseless.” Although the trial court made no written findings in its final judgment for the
denial, in its oral ruling, the court made the following findings and observations:
I didn't necessarily find that defense [essential
terms] as being entirely without merit. I think
thoughtful arguments were raised. You [Infiniti's
attorney] happened to carry the day on the
performance issue. So I don't think I would find
there is a 57.105 issue. I don't know what a
party is supposed to do if they think I'm wrong
on that other than to go to trial and appeal me.
I think I would agree that I saw absolutely no
evidence from the get-go that there was any
setoff here, certainly after some initial discovery
was done and it was pointed out that they
weren't claiming damages for payments already
made. We talked about that at a hearing.
And I think once that was cleared up, yeah, the
defense probably ought to have been
withdrawn. I think failure of consideration was
one, but if at least one of these defenses,
though, I think had merit, how do we parse that
out and why shouldn't they be able to avail the
right to appeal me if I was wrong?
So I'm not sure I can award fees under 57.105
because at least one of these – you know, I can
say to this side of the table, and I know you guys
have a client, which is the defendant, to answer
to, but this is not the way.
This is a model of unprofessionalism over a
$16,000 claim that he capitulates to on the last
day, and you are hanging your hat on a thread
of one defense that I say has some merit. It
really was an enormous waste of legal and
judicial resources to do this, you know.
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....
Frankly, it's shameful, but I also can't criticize
you for raising an issue of lack of essential terms
. . . but for the life of me, Mr. Sherman needs to
understand this is not the way he's to use the
court.
A trial court’s order denying a request for attorney’s fees pursuant to section
57.105 is reviewed for an abuse of discretion. See Ferere v. Shure, 65 So. 3d 1141, 1144
(Fla. 4th DCA 2011) (citation omitted). “However, to the extent a trial court’s order on
attorney’s fees is based on its interpretation of the law,” an appellate court employs the
de novo standard of review. Id. (citation omitted). We find that the court erred in denying
Infiniti’s motions for attorney’s fees and delay damages because it is evident that the trial
court analyzed and ruled on the motions based on the standard applicable to the pre-
1999 version of section 57.105, Florida Statutes, and not the present version of the
statute.
Prior to 1999, section 57.105 authorized an award of attorney’s fees only when
there was a complete absence of a justiciable issue of either law or fact raised by the
losing party. Mullins v. Kennelly, 847 So. 2d 1151, 1154 (Fla. 5th DCA 2003) (citing §
57.105, Fla. Stat. (1997) (additional citation omitted)). “The statute was amended in 1999
as part of the 1999 Tort Reform Act ‘to reduce frivolous litigation and thereby to decrease
the cost imposed on the civil justice system by broadening the remedies that were
previously available’ . . . .” Bionetics Corp, 69 So. 3d at 947 (quoting Yakavonis v. Dolphin
Petroleum, Inc., 934 So. 2d 615, 619 (Fla. 4th DCA 2006)). “The current version [of
section 57.105, Florida Statutes], however, now authorizes an award of fees if a party or
its counsel knew or should have known that any claim or defense asserted ‘was not
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supported by material facts,’ or ‘would not be supported by the application of then existing
law to those material facts.’” Airtran Airways, Inc. v. Avaero Noise Reduction Joint
Venture, 858 So. 2d 1232, 1233 (Fla. 5th DCA 2003). Here, the trial court should have
separately evaluated each of the three affirmative defenses and determined at what point
“defense activities became unsupported.” Id.At the hearing held on attorney’s fees and delay damages, Infiniti presented
evidence that during Sherman’s deposition, as the owner and designated corporate
representative of MS Liquidators, taken before Infiniti filed its first section 57.105 motion,
Sherman could not describe or provide any evidence to support the pleaded setoff
affirmative defense. 2 Furthermore, although MS Liquidators raised the defenses of lack
of consideration and lack of essential terms to the enforceability of the contract, it filed a
joint pretrial statement with the court in which it stipulated that the parties executed a
valid, binding contract. Thus, it is clear that at some point before trial, MS Liquidators
recognized that its setoff affirmative defense and its two affirmative defenses to the
enforceability of the contract were not supported by material facts or the application of the
then-existing law to the material facts. Additionally, Infiniti had provided MS Liquidators
with the twenty-one-day window described in section 57.105(4), Florida Statutes (2013),
to withdraw or correct these three affirmative defenses and thus avoid the possibility of
sanctions under this statute, but MS Liquidators took no action to remedy or withdraw
these defenses.
2At the post-judgment hearing, the company’s attorney acknowledged that MS
Liquidators was unable to support the setoff defense.
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We conclude that, under these circumstances, the trial court erred in its analysis
and denial of Infiniti’s motions for attorney’s fees and delay damages. Ordinarily, we
would remand this case to the trial court to allow it to evaluate Infiniti’s motions under the
current version of the statute. However, based upon the trial court’s previously described
oral pronouncements at the conclusion of the hearing, together with our review of the
record, we find that further evaluation by the trial court is unnecessary and that awards of
attorney’s fees and delay damages under this statute, if the latter can be sufficiently
established, are warranted. We therefore direct the trial court to hold a hearing for the
purposes of determining when MS Liquidators’ three affirmative defenses became
unsupported by the material facts or the application of then-existing law to those material
facts and to award attorney’s fees incurred by Infiniti in litigating these defenses. See
Airtran Airways, Inc., 858 So. 2d at 1233; see also Wagner v. Uthoff, 868 So. 2d 617, 619
(Fla. 2d DCA 2004).
At this hearing, the trial court shall also provide Infiniti the opportunity to prove, if it
can, the amount of its delay damages over and above the attorney’s fees it sustained as
a result of MS Liquidators’ assertion of these three baseless affirmative defenses. See
Korte v. U.S. Bank Nat’l Ass’n, 64 So. 3d 134, 139 (Fla. 4th DCA 2011) (affirming award
of attorney’s fees and costs and delay damages pursuant to section 57.105). The trial
court is also directed to consider whether to assess attorney’s fees and delay damages
against Sherman individually, if appropriate. 3 See Zweibach v. Gordimer, 884 So. 2d
244, 248 (Fla. 2d DCA 2004) (holding that, for purposes “of assessing fees pursuant to
3 We take no position as to whether Sherman should be personally liable for
attorney's fees or delay damages in this case.
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section 57.105, the term ‘party’ is subject to an expanded definition” to include “not only
those whose names appear upon the record, but all others who participate in the litigation
by employing counsel, or by contributing towards the expenses thereof, or who, in any
manner, have such control thereof as to be entitled to direct the course of [the]
proceedings” (alteration in original) (quoting Lage v. Blanco, 521 So. 2d 299, 300 (Fla. 3d
DCA 1988))).
Lastly, we note that in the final judgment under review, the trial court did award
Infiniti the “full amount” of $27,179.25 for its attorney’s fees against MS Liquidators based
upon the provision in the parties’ contract that permitted an award of attorney’s fees to
the prevailing party in the litigation. As such, we reverse the final judgment only to the
extent that it denied Infiniti’s claim for attorney’s fees under section 57.105 and remand
for the trial court to determine, consistent with the statute, what amount of these
previously awarded attorney’s fees are to be assessed against attorneys Brown and
Smothers, and potentially assessed against Sherman as indicated above.
REVERSED and REMANDED, with directions.
COHEN and LAMBERT, JJ., concur.
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